[Vision2020] How Technology Wrecks the Middle Class

[Art Deco]

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  August 24, 2013, 2:35 pm How Technology Wrecks the Middle Class By DAVID
H. AUTOR AND DAVID
DORN<http://opinionator.blogs.nytimes.com/author/david-h-autor-and-david-dorn/>

In the four years since the Great Recession officially ended, the
productivity of American workers — those lucky enough to have jobs — has
risen smartly. But the United States still has two million fewer jobs than
before the downturn, the unemployment rate is stuck at levels not seen
since the early 1990s and the proportion of adults who are working is four
percentage points off its peak in 2000.

This job drought has spurred pundits to wonder whether a profound
employment sickness has overtaken us. And from there, it’s only a short
leap to ask whether that illness isn’t productivity itself. Have we
mechanized and computerized ourselves into obsolescence?

Are we in danger of losing the “race against the machine,” as the M.I.T.
scholars Erik Brynjolfsson <http://digital.mit.edu/erik/> and Andrew
McAfee<http://andrewmcafee.org/>argue in a recent book? Are we
becoming enslaved to our “robot
overlords,”<http://www.motherjones.com/media/2013/05/robots-artificial-intelligence-jobs-automation>as
the journalist Kevin Drum warned in Mother Jones? Do “smart machines”
threaten us with “long-term misery,” as the economists Jeffrey D. Sachs and
Laurence J. Kotlikoff prophesied
<http://www.nber.org/papers/w18629>earlier this year? Have we reached
“the end of labor,” as Noah Smith
laments<http://www.theatlantic.com/business/archive/2013/01/the-end-of-labor-how-to-protect-workers-from-the-rise-of-robots/267135/>in
The Atlantic?

Of course, anxiety, and even hysteria, about the adverse effects of
technological change on employment have a venerable history. In the early
19th century a group of English textile artisans calling themselves the
Luddites staged a machine-trashing rebellion. Their brashness earned them a
place (rarely positive) in the lexicon, but they had legitimate reasons for
concern.

Economists have historically rejected what we call the “lump of labor”
fallacy: the supposition that an increase in labor productivity inevitably
reduces employment because there is only a finite amount of work to do.
While intuitively appealing, this idea is demonstrably false. In 1900, for
example, 41 percent of the United States work force was in agriculture. By
2000, that share had fallen to 2 percent, after the Green Revolution
transformed crop yields. But the employment-to-population ratio rose over
the 20th century as women moved from home to market, and the unemployment
rate fluctuated cyclically, with no long-term increase.

Labor-saving technological change necessarily displaces workers performing
certain tasks — that’s where the gains in productivity come from — but over
the long run, it generates new products and services that raise national
income and increase the overall demand for labor. In 1900, no one could
foresee that a century later, health care, finance, information technology,
consumer electronics, hospitality, leisure and entertainment would employ
far more workers than agriculture. Of course, as societies grow more
prosperous, citizens often choose to work shorter days, take longer
vacations and retire earlier — but that too is progress.

So if technological advances don’t threaten employment, does that mean
workers have nothing to fear from “smart machines”? Actually, no — and
here’s where the Luddites had a point. Although many 19th-century Britons
benefited from the introduction of newer and better automated looms —
unskilled laborers were hired as loom operators, and a growing middle class
could now afford mass-produced fabrics — it’s unlikely that skilled textile
workers benefited on the whole.

Fast-forward to the present. The multi-trillionfold decline in the cost of
computing since the 1970s has created enormous incentives for employers to
substitute increasingly cheap and capable computers for expensive labor.
These rapid advances — which confront us daily as we check in at airports,
order books online, pay bills on our banks’ Web sites or consult our
smartphones for driving directions — have reawakened fears that workers
will be displaced by machinery. Will this time be different?

A starting point for discussion is the observation that although computers
are ubiquitous, they cannot do everything. A computer’s ability to
accomplish a task quickly and cheaply depends upon a human programmer’s
ability to write procedures or rules that direct the machine to take the
correct steps at each contingency. Computers excel at “routine” tasks:
organizing, storing, retrieving and manipulating information, or executing
exactly defined physical movements in production processes. These tasks are
most pervasive in middle-skill jobs like bookkeeping, clerical work and
repetitive production and quality-assurance jobs.

Logically, computerization has reduced the demand for these jobs, but it
has boosted demand for workers who perform “nonroutine” tasks that
complement the automated activities. Those tasks happen to lie on opposite
ends of the occupational skill distribution.

At one end are so-called abstract tasks that require problem-solving,
intuition, persuasion and creativity. These tasks are characteristic of
professional, managerial, technical and creative occupations, like law,
medicine, science, engineering, advertising and design. People in these
jobs typically have high levels of education and analytical capability, and
they benefit from computers that facilitate the transmission, organization
and processing of information.

On the other end are so-called manual tasks, which require situational
adaptability, visual and language recognition, and in-person interaction.
Preparing a meal, driving a truck through city traffic or cleaning a hotel
room present mind-bogglingly complex challenges for computers. But they are
straightforward for humans, requiring primarily innate abilities like
dexterity, sightedness and language recognition, as well as modest
training. These workers can’t be replaced by robots, but their skills are
not scarce, so they usually make low wages.

Computerization has therefore fostered a polarization of employment, with
job growth concentrated in both the highest- and lowest-paid occupations,
while jobs in the middle have declined. Surprisingly, overall employment
rates have largely been unaffected in states and cities undergoing this
rapid polarization. Rather, as employment in routine jobs has ebbed,
employment has risen both in high-wage managerial, professional and
technical occupations and in low-wage, in-person service occupations.

So computerization is not reducing the quantity of jobs, but rather
degrading the quality of jobs for a significant subset of workers. Demand
for highly educated workers who excel in abstract tasks is robust, but the
middle of the labor market, where the routine task-intensive jobs lie, is
sagging. Workers without college education therefore concentrate in manual
task-intensive jobs — like food services, cleaning and security — which are
numerous but offer low wages, precarious job security and few prospects for
upward mobility. This bifurcation of job opportunities has contributed to
the historic rise in income inequality.

HOW can we help workers ride the wave of technological change rather than
be swamped by it? One common recommendation is that citizens should invest
more in their education. Spurred by growing demand for workers performing
abstract job tasks, the payoff for college and professional degrees has
soared; despite its formidable price tag, higher education has perhaps
never been a better investment. But it is far from a comprehensive solution
to our labor market problems. Not all high school graduates — let alone
displaced mid- and late-career workers — are academically or
temperamentally prepared to pursue a four-year college degree. Only 40
percent of Americans enroll in a four-year college after graduating from
high school, and more than 30 percent of those who enroll do not complete
the degree within eight years.

The good news, however, is that middle-education, middle-wage jobs are not
slated to disappear completely. While many middle-skill jobs are
susceptible to automation, others demand a mixture of tasks that take
advantage of human flexibility. To take one prominent example, medical
paraprofessional jobs — radiology technician, phlebotomist, nurse
technician — are a rapidly growing category of relatively well-paid,
middle-skill occupations. While these paraprofessions do not typically
require a four-year college degree, they do demand some postsecondary
vocational training.

These middle-skill jobs will persist, and potentially grow, because they
involve tasks that cannot readily be unbundled without a substantial drop
in quality. Consider, for example, the frustration of calling a software
firm for technical support, only to discover that the technician knows
nothing more than the standard answers shown on his or her computer screen
— that is, the technician is a mouthpiece reading from a script, not a
problem-solver. This is not generally a productive form of work
organization because it fails to harness the complementarities between
technical and interpersonal skills. Simply put, the quality of a service
within any occupation will improve when a worker combines routine
(technical) and nonroutine (flexible) tasks.

Following this logic, we predict that the middle-skill jobs that survive
will combine routine technical tasks with abstract and manual tasks in
which workers have a comparative advantage — interpersonal interaction,
adaptability and problem-solving. Along with medical paraprofessionals,
this category includes numerous jobs for people in the skilled trades and
repair: plumbers; builders; electricians; heating, ventilation and
air-conditioning installers; automotive technicians; customer-service
representatives; and even clerical workers who are required to do more than
type and file. Indeed, even as formerly middle-skill occupations are being
“deskilled,” or stripped of their routine technical tasks (brokering
stocks, for example), other formerly high-end occupations are becoming
accessible to workers with less esoteric technical mastery (for example,
the work of the nurse practitioner, who increasingly diagnoses illness and
prescribes drugs in lieu of a physician). Lawrence F. Katz, a labor
economist at Harvard, memorably called those who fruitfully combine the
foundational skills of a high school education with specific vocational
skills the “new artisans.”

The outlook for workers who haven’t finished college is uncertain, but not
devoid of hope. There will be job opportunities in middle-skill jobs, but
not in the traditional blue-collar production and white-collar office jobs
of the past. Rather, we expect to see growing employment among the ranks of
the “new artisans”: licensed practical nurses and medical assistants;
teachers, tutors and learning guides at all educational levels; kitchen
designers, construction supervisors and skilled tradespeople of every
variety; expert repair and support technicians; and the many people who
offer personal training and assistance, like physical therapists, personal
trainers, coaches and guides. These workers will adeptly combine technical
skills with interpersonal interaction, flexibility and adaptability to
offer services that are uniquely human.

*David H. Autor is a professor of economics at the Massachusetts Institute
of Technology. David Dorn is an assistant professor of economics at the
Center for Monetary and Financial Studies in Madrid.*


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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